Commodities

Cotton prices set to rise on drop in production

Rutam Vora Ahmedabad | Updated on November 18, 2020 Published on November 18, 2020

Agri experts suggest farmers to sell the fibre after January

Gujarat-based agriculture experts have recommended farmers to hold their cotton crop and sell it after January 2021, when the prices of the fibre are expected to rise.

Cotton prices currently hover at around ₹5,790 per quintal at the Rajkot mandi, which is below the minimum support price (MSP) of ₹5,825.

The agriculture research team of the Department of Agricultural Economics-Junagadh Agriculture University (JAU) has estimated range-bound price levels of ₹5,300-5,875 till January 2021.

However, post January, the agri experts have indicated that there will be multiple domestic and international factors that will lift prices.

MG Dhandhalya, Associate Research Scientist, Department of Agri Economics, JAU, in a note stated, “The cotton price which was ruling around ₹5,000 per quintal in December 2019 dropped to ₹4,250 in April, 2020. With exports gaining momentum from July onwards, the market revived and prices started to move above ₹5,300 in October. Prices are now expected to remain firm, owing to less production at world level.”

For 2020-21 the cotton area in India is estimated at 129.57 lakh hectares and production as projected by the Centre’s First Advance Estimates in September 2020, is at about 371 lakh bales.

But the torrential rains received in third week of October, have damaged the crop to a large extent. Also, Cotton Association of India has estimated an output of 356 lakh bales (360 lakh bales).

Price outlook

Indian cotton is currently the cheapest in the world and this has triggered new prospects for exporters.

“The price of kapas during November 2020 to January 2021 may remain in the range of ₹5,300-5,875 per quintal. Hence, farmers are suggested to take note of the above situation and store kapas and sell after January. Those farmers who cannot afford to store kapas, may sell at MSP, in CCI centres for the same,” the JAU note stated.

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Published on November 18, 2020
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